Musings on Living in the Ledger: Exchanging Bitcoins and Joining Steemit

I was at a Bitcoin meetup in New York City several years ago, at a small conference space in lower Manhattan. This was well after one Bitcoin had made its way to the then hard-to-believe triple digits of U.S. Dollars and much wider public consciousness after little ol' Cyprus had threatened a banking haircut. Yeah it's just Cyprus, but FDR had closed our banks once. Maybe it would happen again? There was a forgettable presentation then words from a couple of random sponsors. It was full of either, depending on your taste, "crypto-anarchists" or "colorful early adopters." Not many white collar bankers channeling their inner Winkelvosses yet.

Then the meeting really got down to business. The center of the meeting room cleared out, and a group of traders gathered in the center of the room in a circle. What price would you sell? What price would you buy? The future was indeed here but unevenly distributed. So was the past - this is how shares were traded not far from there in the early 19th century. It was like a scene that would be left on the cutting room floor of "Cloud Atlas." These traders had more in common with a Dungeons & Dragons party than jocks at the NYMEX: it was subdued but very very serious.

At about this time most of the other real trading pits of the world were giving in to computers and shutting down. Here was old fashioned wetware trading the results of computation...People waited around nervously as cash traded hands, buttons on smartphones were pushed and the blockchain computed. Down the street trades were done in a millisecond. Here at the bleeding edge future it took ten to fifteen minutes. The trade made, the men would part with a nod or a shakeshake, both on the same side of the trade against the world.

I had opened a Coinbase account, intrigued by the speculative possibilities. I said this to someone as I fingered enough cash to maybe make an in person purchase. "Coinbase!" one of the bearded people who didn't want to use his real name shouted, "That misses the whole point of Bitcoin!" Any hosted wallet did. I demurred that I had a bitcoin wallet on my PC as well - "Don't tell me that, you could get hacked." The militancy of it all was enough to think I was probably out fo my league to hand over cash ("FIAT!") for an alphanumeric string who had value because all these characters said it did.

The scene in the early 2010s was one of high distrust of government. Just how much money could the Fed print and the Treasury spend to bail the homeowners of America out of the real estate bubble? Bitcoin was one alternative. Shorting U.S. Treasuries was another. That was something you could do with the malevolent security hole of a trusted third party...but it was really trustworthy. I bet wrong and pursued more of the former than latter. This is the great investment irony to me of the last decade: a proverbial flight to safety made landings on both the value of both Bitcoin and...OK, I'll say it...Fiat Bonds.

The CNN article linked above cited Mt. Gox - a former Pokemon card trading site - then the world's leading exchange for Bitcoins. I thought about my cyberpunk acquaintance in Manhattan when they were hacked...and thought about him again after Coinbase sent me into a Kafkaesque support hell for the last two weeks.

Every unhappy customer service story is unhappy in its own way, and I won't recite all the details. Ethereum had jumped all the way to $100, then $131. Jesus, I thought, this is a classic "blow off top" in trading. I want to sell. Now! This damn thing - it's called "Ether" for Chrissakes - could be back at $20 in a heartbeat. Bitcoin after all had such patterns. Thirty five emails followed mostly me asking support@coinbase variants of "Update, please." What are the stages of grief? I finally gave into Acceptance - this was easier since the price continued to rise - when finally I got access.

I think this was a blow off top...the real one. Coinbase's screw ups saved me from myself....but assets don't rise 6x in six weeks, and 25x in six months, without some "retracement" (the trader's preferred euphemism for "steep fall".) Trading is hard. How do you time the entry of a position? I'm back in my accounts, I won't be gated by the whims of customer service. But for now, I have to get out. The trusted third party has blown a hole in the expectation of reliability a customer should have in a financial institution. Coinbase has really blown it.

One of Satoshi's last known public comments was a plea for Wikileaks not to accept bitcoin. As Wired recounted it in November 2011 in one of the first mainstream articles on the cryptocurrency, "The Rise and Fall of Bitcoin": "The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to Wikileaks not to try to use bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage."

Is the recent heat enough to destroy it now? Probably not. Enough to send them into a 70%+ correction? That probability to too high. Coinbase's CEO is posting to medium that they'll hire an additional ten contractors and spin up an outsourced customer service facility. Meanwhile the n00bs and myself are pounding relentlessly on the door to get in or out. Hundreds of thousands of new customers and they can spare only ten new hourly workers sitting at some telemarketing center? That's Fiat Management, which is worse than Fiat currency. I will go long BTC & ETH again. I don't know when. Coinbase has a great lineage and I believe they mean well; they have all sorts of incentives to mean well for customers. But so did Enron. You just don't know. (Shout one last time to the colorful-crypto-early-anarchist!)

It's laughable to call Bitcoin garbage like Marketwatch does. It is still messy. Too messy for a startup protocol eight years old, or well funded financial institutions that serve it to act like a knock off photo sharing startup when it comes to infrastructure quality. I've started to study and understand the appeal of distributed ledgers and the ills they can address. I'll likely write about them here (along with politics, history and sports.) Those ills are not just money-printing governments - maybe that's the least likely successful use case.

Tazos, Filecoin, Golem, Zcash...all so fun to think about what are the upsides?! Placing each with hopes like parents do new children. Maybe Steemit will topple money-printing social networks, who productize their users. I wouldn't know my way around a Merkle tree so one way to participate in the distributed ledger while the mess gets cleaned up is to write.

Looking forward to being a part of the Steemit community.